Intel profit plunges 90% but meets expectations

Intel Corp.’s fourth-quarter profit plunged 90% but still met Wall Street’s subdued expectations Thursday, as the chip maker was hurt by wheezing PC sales that have crimped demand for microprocessors. Sales slumped 23%, in line with Intel’s previous guidance.

That was good enough to send Intel’s shares up 2.1% in after-hours trading.

Net income was $234 million, or 4 cents a share, compared with $2.3 billion, or 38 cents, a year earlier.

The Santa Clara, Calif., company’s profits are being squeezed by a freeze in information-technology spending and a shift toward low-margin processors for a class of little laptops known as netbooks. A big reason for the severity of the fourth-quarter drop, though, was a $1-billion write-down of the value of Intel’s investment in Internet provider Clearwire Corp.

Clearwire specializes in a new type of wireless broadband technology called WiMax that Intel is building into its chips, and has stumbled on fears that the credit crunch will derail its ambitious network build-out plans.

Intel’s sales were $8.2 billion, a 23% shortfall from last year. Intel blunted the shock of the big declines by lowering its guidance twice, including an announcement last week.

For all of 2008, Intel earned $5.3 billion, 24% lower than a year earlier, on sales of $37.6 billion, a 2% decline.

During the regular trading session before the earnings report, Intel stock rose 21 cents, or 1.6%, to $13.29. The shares hit $13.58 in after-hours trading.